WASHINGTON, March 14, 2012 -With Russia set to join the World Trade Organization (WTO) in August of this year, the Senate Finance Committee is scheduled to hear testimony Thursday on the implications of the accession for the United States.
The Obama administration lists granting Russia Permanent Normal Trade Relations (PNTR) status as one of its top priorities for 2012, according to U.S. Trade Representative Ron Kirk’s testimony at a Senate Finance Committee hearing last week. Kirk said improving trade relations with Russia fits with the President’s goal of doubling U.S. exports over five years.
Kirk said the president’s priorities for Russia’s accession include seeking legislation from Congress “to ensure that American firms and American exporters enjoy the same job-supporting benefits of Russia’s membership in the WTO rules-based system as our international competitors.”
Kirk specifically wants to repeal the Jackson-Vanik Amendment, a 1974 amendment which denies most favored nation (MFN) status to nations with non-market economies that restrict emigration. Since the 1992 Bilateral Trade Relations Agreement between Russia and the United States, normal trade relations status has been established between the two nations. Kirk said the President should be authorized to make this status permanent by extending PNTR status to Russia “as soon as possible.”
“Bringing Russia, the largest market currently outside the WTO, into the rules-based global trading system will provide the United States with more enforcement tools to secure enhanced market access for both U.S. goods and services and a level playing field for U.S. exporters and service providers in Russia,” Kirk said.
Granting PNRT status is important for U.S. manufacturers, because without that status, some U.S. exports will face duty charges up to 15 percent for Russian buyers, making it cheaper for Russians to buy goods without a duty charge from other nations. The competitive disadvantage for U.S. goods makes granting Russia PNRT status the wisest business decision, according to an agribusiness official familiar with U.S.-Russian trade negotiations.
More than 150 organizations from across the business community have submitted a letter urging the committee to support PNTR with Russia.
“The pork and poultry industries, which use soybean meal in animal feed, are poised to see great success in Russia as income levels rise and the demand for meat increases. What benefits these industries benefits soybean farmers,” said Danny Murphy, first vice president of the American Soybean Association, one of the signatory groups on the letter. But, he added, the trade advances hinge on further expansion of trade to Russia. “The establishment of PNTR with Russia is
critical to our ability to increase soybean exports into Europe’s largest consumer market and the world’s 11th largest economy,” he said.
Elsewhere, the National Pork Producers Council (NPPC) said it is concerned with aspects of Russia’s World Trade Organization accession package regarding “barriers that have severely affected U.S. pork exports to Russia,” citing a 60% drop in U.S. exports since 2008 because of what the industry says are because of Russian restrictions based on non-science-based sanitary-phytosanitary (SPS) issues.
“We’re very excited about any opportunity to expand trade opportunities for U.S. beef,” said Errol Rice, executive vice president of the Montana Stockgrowers Association, whose president, Watty Taylor, will testify Thursday.
Some members of Congress are concerned with Russia’s poor human rights record, corruption and theft of U.S. intellectual property. Senate Finance Committee Ranking Member Orrin Hatch, R-Utah, said passing PNTR with Russia does not fit in line with Obama’s rhetoric on pursuing trade policies consistent with his values.
“Somehow those values vanish in the context of trade with Russia, a corrupt and autocratic regime,” Hatch said. He added that the Russian market amounts to .05 percent of total U.S. exports worldwide. “It is a market we will have access to anyway on an MFN (most favored nation) basis under the terms of our 1992 trade treaty once Russia joins the WTO,” he said.
However, Chairman Max Baucus, D-Mont., echoed Kirk’s sentiments, saying permanent normal trade relations with Russia “would double U.S. exports to Russia in five years. And we give up nothing in return; not a single U.S. tariff will be reduced as part of this deal.” He also quoted Russian democracy, human rights and transparency activists as supporting PNTR, who told him that “repealing Jackson-Vanik weakens the ability of the hardliners in Russia to rally anti-American forces,” he said. “Repealing Jackson-Vanik will open Russia to U.S. companies and promote competition, openness and transparency.”
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Original story printed in March 14, 2012 Agri-Pulse Newsletter.
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